Exclusive – Greene King acquires Hickory’s, sees potential for it to become a national brand: Greene King, the Nick Mackenzie-led pub company and brewer, has acquired American-style smokehouse and barbecue business Hickory’s Smokehouse for an undisclosed sum, Propel has learned. Greene King said it sees the potential to grow the 17-strong Hickory’s into a national dining brand and the investment underpins the company’s strategy of growing its reach through “compelling brands and unlocking value by making the most of each of its sites”. It said Hickory’s, which earlier this year was crowned the UK’s best large employer in the “Best Large Companies To Work For 2022” awards, is a “well-invested business with attractive unit economics and the potential for considerable future growth”. Hickory’s was founded in Chester by Neil McDonnell in 2010 following extensive research into the American barbecue and smokehouse sector. In October 2014, Piper invested £6m to support the roll out of the then three-strong brand. Hickory’s currently operates 17 restaurants across the north west, Midlands, North Wales, Yorkshire and Nottingham and employs circa 1,500 people. Greene King said Hickory’s is “highly complementary” to its current portfolio of brands and geographical reach. As part of the deal, Greene King plans to “leverage its scale and expertise to accelerate the national roll out of the Hickory’s brand beyond its north west heartland, with significant growth over time by optimising Greene King assets”. As part of Greene King, the business will continue to be run by its current management team, including McDonnell and led by managing director John Welsh. It is understood Hickory’s has performed exceptionally well since reopening following the pandemic. Mackenzie said: “Hickory’s is an outstanding business that has established itself as one of the UK’s leading barbecue smokehouse restaurant operators. This is a business that has a commitment to authentic hospitality and dining experience, and that has an offer loved by its customers, old and new. Hickory’s shares Greene King’s focus on providing quality food and drink at the best possible value and when looking at our stable, it really complements our existing brands. We are confident we can take Hickory’s to the next chapter in its history, and we look forward to working with John and the whole of the Hickory’s team as we focus on building it into a national dining brand.” McDonnell said: “We are delighted to have this investment from Greene King, which enables us to bring the Hickory’s smokehouse offer to many more guests and locations. This will provide our teams with fantastic opportunities for growth and development.” Last November, Propel revealed Hickory’s, which has been backed by Piper since 2014, had appointed advisory firm BDO to help review its funding options for its next stage of growth. Sapient Corporate Finance is believed to have acted for Greene King. Hickory’s features in Propel’s Turnover & Profits Blue Book, which shows the business turned over £27,733,010 in the year ending 30 April 2020 despite losing the final six weeks of trade due to closures after the outbreak of the covid pandemic. It made a pre-tax loss of £1,433,951 that year while Ebitda before pre-opening and exceptional costs was £1,265,000. In the following year, due to restrictions on trade, the business turned over £19,485,062 with pre-tax losses narrowing to £458,987 and Ebitda before pre-opening and exceptional costs increasing to £2,542,000. The Blue Book will feature 638 companies when the latest edition is released on Friday (14 October). The Blue Book, which is produced in association with Mapal Group and is updated monthly, provides a five-year overview of turnover and profit, ranks companies according to turnover, pre-tax profit and profit conversion. The Blue Book also provides details of directors’ earnings and highest paid directors. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription.

And the tortoise wins again. A few years back I noted Hickory’s had been playing the role of the tortoise to Red’s True Barbecue’s hare. Both were built on southern US hospitality, but the latter burnt brightly and then burnt out, only to be rescued through a restructuring, while the former’s steady, more community-focused approach has reaped the longer-term success. With the backing of Piper, and under the watchful eye of chairman Paul Campbell, founder Neil McDonnell and managing director John Welsh, have built one of the sector’s new standout brands. A business built on a quality offer and strong culture, that has rebounded out of the pandemic stronger than most, the fear was the pandemic and the current cost-of-living crisis would hamper its ability to capitalise on its position. Unsurprisingly, M&A activity in the sector is thin on the ground, but for the right business, investors are still willing to come out and play, and speak to anyone about Hickory’s and they will tell you it fits that criteria. It now comes under the wing of a business in Greene King that is determined to unleash the potential of its own assets, with chief executive Nick Mackenzie determined to get every ounce out of the estate he inherited and the cultural evolution he is overseeing.

Under Piper, Hickory’s has grown from five to 17 sites, with revenues now around £55m. Earlier this summer, it reported its like-for-like sales for the 50-week period since reopening fully last year were up 39% compared with the pre-covid period of 2019-20. The company said its sales are up 33% since April 2022. Underlining this performance has been its award-winning approach to its people. The company was crowned the UK’s best large employer in the “Best Large Companies To Work For 2022” awards earlier this year, something Welsh puts down to “placing training and passion at the heart of everything we do”. He says: “And, more importantly, listen to what our team have to say. And with that we mean every team member. We’ve always said if you want to know the truth never just ask the general manager, ask everyone that works for them.” However, it’s not been the company’s only source of feedback. 

Welsh says: “Every year we conduct our management ‘roadshows’ where I, along with our founder and fellow directors, visit each restaurant and meet every single team member for a one-to-one, 20-minute chat. These chats are honest and completely confidential. Our key question is: ‘If this was your business what one thing would you do to make it better?’ The answers can sometimes be genius or surprising, and occasionally hard to listen to. But they give us more insight and understanding than any survey could.” Admittedly, these roadshows have become more of a logistical challenge as the business has grown, but Welsh says they’re not going anywhere. Greene King, under Mackenzie, has also undergone a significant evolution of its people proposition, and the two businesses should find a lot of common ground here.

Hickory’s recently opened its first Greene King lease in Hutton, near Preston, but Mackenzie says his business has been keeping an eye on the brand for a while. He tells me: “It is a pretty unique brand, and I think it’s got significant potential. It is the leading barbecue smokehouse restaurant group in the UK and we see a strong future for it. I think it gets us into a part of the market that we're not in right now. We believe it’s got national potential and I know the management team do as well. The most important thing is that management team is staying with us and we will take our time in regards to what sites we put the brand into, there is no rush.” While Mackenzie won’t be drawn on specific sites, I imagine that an initial focus for Hickory’s and Greene King will be around the latter’s Hungry Horse estate and perhaps a few of its Farmhouse Inns sites, in terms of a pipeline of conversions. 

Talking to Mackenzie earlier this year, he was keen to set out strategic levers Greene King would be focusing on, and expand was one of them. He says: “I think this allows us to expand our reach into different markets with the demographic that this brand delivers. The second one is that it really gives us the opportunity to push the brand wider and optimise our assets. The third point is we've built up lot of assets over a long period of time and we have to think through the best way we can utilise those and maximise the potential for them. So, there's a very good strategic logic to this. It's a great business that has shown the financial returns are strong, even in a tough market. And we really like John and the team and we think we can work well together. Culturally there's a good fit.” Hickory’s will drop into Greene King’s Venture division. Mackenzie says: “We want to be able to take the best of Greene King with the best of a management team and allow that management team to be able to pull on what's great about Greene King, which is the scale and the assets that we've got. But we absolutely need the management team to stay with us and for the business to sit in Venture where it can operate as independently as possible but can draw, you know, on the great things that Greene King can deliver as well. We're looking at this as a long-term deal. It's not a quick in and out for us. We think it's a great sector that we've got some great assets for and that we can take it nationally but it's going to be a long-term play. We all know it is quite difficult out there at the moment, very difficult, but I think this does demonstrate a bit of faith in the long-term future of the sector.”

Welsh says: “It's pretty obvious in terms of estate and the support that we could get from Greene King. I think those are massive benefits, but one of the big things that stuck with us probably early on was when I first met with Nick, was assurance we will be able to retain our independence. That’s really important to us. Whether that's the local customer that’s around the corner or whether it's our team members, we still need to feel and operate like a small independent, sort of family business, and I think we will continue to do so going forward.” That community feel stood the business in good stead during the pandemic and enabled it to rebound strongly. Mackenzie says: “That’s one of the key values with Hickory’s is that it is at the centre of a community and I don’t think you can't say that for every restaurant brand, but I think there’s is a real connection there.”

The brand’s strengths made it an obvious target for the larger pub companies. It is hard to see many of them giving Hickory’s any more sites if it had gone down the private equity route again. I understand Mitchells & Butlers also had a close look at Hickory’s earlier this summer, and you could see it looking to do a similar venture as it has with the James Horler-led Ego Pubs, while chief executive Phil Urban recently mentioned to me how it had thought about exploring an “Old Orleans-type” of format. Neither Mackenzie or Welsh would elaborate on the value of the deal, although at the start of the year, it was understood Piper valued it at circa £50m. The deal is also similar in scope to the one RedCat did last year for Coaching Inn Group, a business that has also been admired by Greene King. With Hickory’s it gets to bring something different to the party. For a while Greene King has been focused on mainstream value, and been slightly more, wet-led than food-led. Mackenzie has been looking to broaden that, make it a much more diverse portfolio, which, as he points out after the last few years: “Long-term it gives you a hedge against situations like this and hedge against other situations happening. It also means you can get a much more stable profit base.” Hickory’s provides Greene King with a great platform to build upon, there’s no rush to prove otherwise.